A growing number of prime borrowers are requesting person-to-person loans online through Prosper Marketplace Inc.
The San Francisco loan facilitator said Tuesday that 18% of its loan requests last month came from people it considered prime borrowers — those with Experian Inc. credit scores of 720 or higher — compared to 12.4% of requests in January and 9% in February of last year.
In January and February 41% of the loans granted were to prime borrowers, compared to 24% with loans made in the first two months of last year, Prosper said.
Last month prime borrowers received 43% of the loans originated through the company, versus 25% a year earlier and 43.5% in December.
Subprime borrowing through Prosper is falling. Last month just 33% of its loan requests came from borrowers with credit scores of 560 (the company’s minimum for borrowers) to 600, versus 54% a year earlier, and they received only 6% of the loans originated, versus 18% in February of last year.
Prosper is one of several online facilitators of loans between individuals. The company, whose service has been available for two years, has made several tweaks to its Web site aimed at making more information about borrowers, such as their loan histories, available for potential lenders to evaluate.
Chris Larsen, Prosper’s chief executive, said the changes are part of the reason its loan mix is shifting to favor prime borrowers.
“By providing more robust information to lenders on the expected returns of listings, we have seen an increase in originations” to borrowers with “attractive risk-reward” profiles, as well as a decrease in originations to borrowers with “unattractive risk-return listings,” Mr. Larsen said in a press release.
Prosper has said the details provided in many loan requests demonstrate borrowers’ interest in being fiscally responsible.
The company says the vast majority of loan requests are from people who want to consolidate debts, typically to pay down credit card bills, who hope they can get they can get a better interest rate through Prosper than they can negotiate with their credit card issuers.
Mr. Larsen has also said that prime borrowers are turning to Prosper because banks have become more conservative about granting loans, in the wake of the subprime credit crisis.
Other person-to-person loan facilitators are also making efforts to court prime borrowers.
Lending Club Corp. of Sunnyvale, Calif., has a higher credit score requirement for its borrowers and even boasts of the volume of loan applications it has turned down.
